Call Richard Cook: 07770 575 122

email: richard@theinvestmentandretirementcoach.co.uk

The 7 things you must know about the new Pension Freedoms

April 6th 2015 saw the introduction of the most significant pension changes in a generation. The changes are good news for most of us but, as ever, they need action and there are some significant pitfalls to avoid.


Here are seven important things you need to know:

  1. Once you reach age 55 you can take money out from your pension plan, either as income, or as lump sums, whenever you choose.  For all practical purposes your plan has changed from being a “Pension” plan to being one of the most tax efficient “Savings” plans you could possibly wish for.
  2. 25% of your fund can be extracted tax free.  Any balance will be taxed as income at your marginal rate of tax.  Get it wrong and you could end up with a huge tax bill.  Be sure you talk to me or your adviser before you decide how much to take if you wish to avoid that unwanted tax bill.
  3. Your pension no longer has to die with you.  As long as you don’t take the annuity route your pension plan can be passed to your beneficiaries totally tax free if you die before age 75.  After age 75  your beneficiaries can take income at their marginal rate of tax.  Take it all as a lump sum and there will be a tax charge of 45%.
  4. The change in the taxation of pension death benefits will cause many families to review their Inheritance Tax strategy.  Be sure to talk to me or your adviser as there are some big pitfalls to avoid.
  5. Many clients who have avoided pensions because of the previous lack of flexibility and control are now looking again at the benefits.  Whether you are a higher rate tax payer or have modest earnings on which you are not paying tax there is something in this for you.
  6. If you have worked hard to build up a big pension plan be very careful or you could be one of the losers.   Take advice quickly.  For example if you are enrolled into one of the new Auto Enrolment pension schemes and do not opt out within one month you could be caught by the reduction in the lifetime allowance to £1.00 million and finish up with a huge tax bill.
  7. If you are fortunate enough to be in a final salary pension scheme you have a great deal of security but unfortunately you do not benefit from the new freedoms or the ability to pass your pension fund to your beneficiaries.  Giving up security for flexibility and control is a big, big decision.  You will need professional advice but may be it is something which is worth investigating.

How can we help? Firstly sign up for a free telephone discussion by completing the box on the right. Secondly sign up for blog updates in the box below. Over the next few weeks we will be covering all of the above points in more detail as well as other issues which crop up as we talk to more and more clients.

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After your house your pension is probably your biggest investment. Please, please do not lose out. Now is the time to give it some love and attention.


This document and our on going services are not personal advice. We'll give you all the help and guidance you need to make your investment and retirement decisions, but we can't advise you. If you're not sure whether you need regulated financial advice we can put you in touch with a suitably qualified and experienced regulated adviser. Because we are not regulated by the Financial Conduct Authority you will not have access to the Financial Ombudsman Service in respect of any complaints. If you use one of the "no advice" on line services to handle investment transactions they will be Regulated and you will have access to the Ombudsman and The Financial Compensation Scheme in respect of their services. The value of investments/pension plans can fall or rise depending on market performance. The Retirement Team and The Investment and Retirement Coach are trading names of Capture Success Ltd Reg No 01825075 Tel 07770575122

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